Commercial Loan Options - What would you do?

[Mitchell Fuselier]

Long time reader, second-time poster (I think)

I'm under contract on a small multifamily (6 units) and am comparing loan options. For background, this is a stable, performing property with a plan to buy and hold for as long as makes sense. Minimal CapEx requirements up front, and a little Loss to Lease in the first few years with some units' rents being below market.

I’d love to get some feedback on what you’d do and why!

Option A - Local Bank

LTV: 75%

Am: 25yr

Term: 5-yr ARM at 4.2% or 7yr ARM at 4.54%

Origination Fee: 0.5%

Prepay Penalty: $0 (1% of remaining loan if refi’d with another lender)

Option B - Private Lender

LTV: 80%

Am: 30yr

Term: 10yr ARM at 5.25%-5.5%

Origination Fee: 1%

Prepayment Penalty: $0 (1% of remaining loan if refi’d with another lender)